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Resource Investor interviews Sprott Asset Management''s John Embry
By Peter Brimelow
CBSMarketWatch.com
Thursday, December 1, 2005
http://www.marketwatch.com/news/story.asp?guid=%7B4966E5D6%2D7405%
2D4599%2D8AD9%2D4E05F8A90FDF%7D&siteid=mktw
NEW YORK -- Gold hits the $500 gong -- but is that it? The gold bugs
remain calmly confident, long-term.
First, a word from our proprietary source. Last night's reading from
the Hulbert Gold Newsletter Sentiment Index (HGNSI), which reflects
the average gold market exposure among a group of short-term gold
timing newsletters tracked by the Hulbert Financial Digest, is a 50%
average exposure -- the same as Tuesday's close.
Neither gold's getting above $500, nor the subsequent pullback, has
excited the average letter.
To put the current gold sentiment reading in context: The all-time
high reading for the HGNSI is 89.6%. So current gold market
sentiment is only modestly more than half its record -- despite the
multi-decade high for gold. Two months ago, when bullion was trading
around $465 per ounce, the HGNSI stood at 71.4%. So in the face of
an 8% rally, the average gold market timer has become less, not
more, bullish.
Mark Hulbert's conclusion: there's a significant undercurrent of
skepticism about the future of gold's rally. Since bull markets
thrive on skepticism, this is an encouraging sign.
Dow Theory Letter's Richard Russell, a long-time gold bug, said
flatly last night: "Gold now correcting as predicted. ... Too much
publicity on 500 gold. Gold talk will have to calm down."
Money where his mouth is? Russell said explicitly:
"I'm pretty much out of the stock market, heavily in gold, and
basically in cash, better known as T-bills or money market funds."
Russell gave his overall view earlier this week:
"Gold has entered a new phase. This phase is characterized by gold
separating itself from all paper currencies including the dollar.
It's clear that something has changed -- that gold is now being
accepted by sophisticated investors, not as a speculation, but as an
alternative currency. Thus, over recent weeks while the dollar was
strong, gold has continued to climb. Such action would have been
considered almost impossible even a few months ago.
"Gold is now being accepted as the fourth currency along with the
dollar, the euro and the yen. But there is a difference. Gold is
also being recognized as the tangible currency and the ONLY SAFE
currency. That gold pays no interest -- but is still at an 18-year
high in terms of dollars -- is a testament to its value and safety
in the eyes of sophisticated investors."
Russell went on:
"Gold-philes have been complaining of late that the gold stocks have
not been following the metal. I've explained that there's an
alternation that takes place in relative strength between bullion
and gold shares. Even so XAU, a gold and silver average, has broken
out above a major resistance level. However, HUI has not confirmed."
Short-term:
"In the big picture, gold has gotten very far ahead of itself. The
best action now would be a sideways movement, probably with gold
holding above 485, while a correction allows some of the steam
created by gold's latest rise to be released."
While we're on the subject, the strategically superbearish Russell
is now tactically bearish on the stock market too.
He writes: "The Dow will probably move sideways with a downside bias
or just plain down. The Dow is overbought and tired -- and interest
rates are heading higher."
In contrast, a fellow veteran goldbug, Harry Schultz of the
International Harry Schultz Letter, is a hyperactive trader. In his
current Free Market Update, he writes:
"Crucial 500 resistance may cap a 3-wave rise from July lows. If
yes, a consolidation dip towards support of July uptrend (now 462)
may develop. If not, a rise above 500 could trigger a climax rally/
overshoot towards the 520-535 area. Chart neutral to short-term
bearish."
Money/mouth:
"Mainly, I'm long lots of better-acting gold shares. I sell golds
when the profit is satisfactory & I want to bank them. ... Among my
longs are: Anglo American, Falconbridge, Freeport McMoranCorp.,
Gammon Lake, Goldcorp, and Teck."
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http://www.a1-guide-to-gold-investments.com/euro-vs-dollar.html
http://www.investmentrarities.com
http://www.kereport.com
(Korelin Business Report -- audio)
http://www.plata.com.mx/plata/home.htm
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http://www.resourceinvestor.com
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http://www.interventionalanalysis.com
http://www.investmentindicators.com/
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Ted Butler silver commentary archive:
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